russia’s Economy Is Repeating the Scenario of the Late ussr

The rf’s economy is entering its deepest crisis in two decades, which may force the kremlin to radically revise the economic policy it has been pursuing since the early 2000s. The results of 2025 showed a sharp slowdown in industrial growth, a record budget deficit, and significant financial losses in the real sector. This indicates the exhaustion of the model of state capitalism, which was based on large-scale budget injections.

The key sign of the crisis is the virtual halt in industrial growth. While industrial production grew by 4–6% in 2023–2024, growth was only 0.8% in the first eleven months of 2025. The most telling sign is the decline in manufacturing. Freight traffic on “russian railways”, which fell to its lowest level in 16 years, indicates both problems with exports and a cooling of the domestic market.

The financial condition of private enterprises is also rapidly deteriorating. The rapid worsening of the budget situation has become a separate factor of instability. The rf’s federal budget deficit in 2025 grew to 5.65 trillion rubles, having exceeded even the level of the COVID-19-affected 2020.

Despite the slowdown in spending growth, government spending remains at record levels, which keeps inflation high and forces the authorities to increase the tax burden.

Analysts are increasingly comparing the current situation to the delayed crisis of the late ussr, when economic problems were masked by debt for a long time. Although the scale of the current challenges is not comparable to the catastrophe of the 1990s yet, russia is inevitably facing a prolonged period of economic turbulence.